Investor Irrationality and Closed-end Hedge Funds

Oliver Dietiker ()

Journal of Financial Transformation, 2010, vol. 30, 57-65

Abstract: The present study assesses the rationality of investors who pay large sums to hedge fund managers for their services. For my analysis I use a sample of closed-end funds which invest their capital in one or more open-ended hedge funds. The results imply that investors rationally exploit the available information when deciding whether to engage in the initial public offering of a new closed-end fund. However, I also find evidence that investors react with a burst of irrational pessimism to the worsening economic conditions in the second half of 2008.

Keywords: investor irrationality; hedge funds; closed-end funds (search for similar items in EconPapers)
JEL-codes: G23 (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:ris:jofitr:1441

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